Gifts in kind, often called “in-kind donations,” are a type of charitable donation in which, rather than giving cash to a qualifying nonprofit NGO with which to purchase needed supplies and services, the goods and services are donated directly.
In-kind donations are distinguished from cash or stock shares gifts. While some nonprofit observers have debated the advantages of in-kind donations over giving cash, others have argued for the disadvantages of gifts in kind, particularly in the context of disaster relief. For a summary discussion, go to Wikipedia: Gifts in kind
Whatever the pros and cons, the annual volume of entering in-kind donations being made to nonprofits is on the rise.
So how does a nonprofit properly go about entering in-kind donations in QuickBooks?
Cash-strapped businesses must make every dollar count. Excess inventory is a drain on resources as is idle unbilled time.
Increasingly companies are turning to barter as a way to boost sales by converting excess goods and capacity into something that can be used for business. And they’re doing it while saving precious cash for those things that require money to buy.
Different forms of bartering have been around throughout history. In its purest form, bartering is a way to re-distribute resources for the good of all parties involved.
CPA Lisa Aldrich explains some of the tactics and caveats, and the advantage of using a good “barter exchange” –
For one, you need to find someone who has what you want and is willing to trade it for what you have. And you have to agree on how much of each is fair. Direct barter trades are notoriously unequal.
With the growth of the internet, barter exchanges have blossomed worldwide. In 2010, there were estimated to be over 450,000 businesses using barter exchanges, with approximately 400 barter companies worldwide.
As small business owners we all have different needs. The bookkeeping systems we select may vary, the specific reports that we access to make crucial business decisions may vary, even the frequency of our accounting may be vary. But at the foundation of it all is what we call a Chart Of Accounts. And your chart of accounts is specific to your business’ needs and, set up correctly, it often will be different from that of other companies.
So What is the Chart of Accounts?
Our business dictionary defines the chart of accounts as a “System of accounting records developed by an organization to be compatible with its particular financial structure, and in agreement with the amount of detail required in its financial statements.”
Click here to see a sample Chart of Accounts